S .S.KANG,VICE -PRESIDENT - (1.)Heard both sides. The applicant filed an application for waiver of pre -deposit of Rs. 4,44,83,873/ - and penalty of the equal amount. In this case demand is confirmed in respect of two bulk drugs namely PACUTAXEL AND DOCETAXEL, manufactured by the applicant at their at Sahibabad. Both the bulk drugs are cleared to their unit at Baddi and captively consumed in the manufacture of INTAXEL injection and DAXOTEL injection.
(2.)THE dispute is in respect of the assessable value of the bulk drug cleared to Baddi unit. It is an admitted case that the bulk drug is captively consumed. The cost of production declared by the applicant is not accepted by the revenue on the ground that there are discrepancies in the maintenance of record and there are also manipulation in the record. The adjudicating authority rejected the cost of production as declared by the applicant and under Rule 11 of Central Excise (Valuation) Rules, 2000 determined the cost of production of the bulk drug after taking into consideration the price at which Baddi unit is selling the injection manufactured out of this bulk drug. The adjudicating authority adopted the method of best judgment assessment and taken into consideration the 75% of the cost of injection as the cost of bulk drug.
(3.)THE contention of the applicant is that for stay purposes though not admitted the case of the revenue that the applicant had not declared the cost of production correctly. Under the provisions of Rule 11 of Valuation Rules, the cost of final product cleared by another unit cannot be taken basis for arriving at the cost of bulk drug. The contention is that as per the provisions of Rule, the cost of bulk drug is to be determined uses the reasonable means consist with the principles of general provision of these rules. The contention is that Rule 8 provides regarding determination of value of the goods which are not sold by the manufacturer but are used captively consumed and the value as per the Rule shall be 150% of the cost of production. The contention is that in case Revenue is rejecting the cost data provided by the applicant, the revenue is determining the cost of production and the method adopted by the adjudicating authority by taking into consideration 75% of the cost of the final product manufactured by Baddi unit is not sustainable whereas value addition is 172%. The contention is also that the applicant produced all the cost data showing that they had correctly determined the cost of production which was ignored by the adjudicating authority.
The contention of the Revenue is that the cost data supplied by the applicant are not reliable data as the cost of the raw -material used in the manufacture of bulk drug. In the suppression price, the cost data manipulated by the applicant as held by the adjudicating authority. The contention is that the provisions of Rule 9 provides that the cost of final product can be taken into consideration by determination of the value of goods. Where such goods are cleared to related person and were cleared by the persons in the same condition, therefore, by adopting the price of final product i.e. injection by the adjudicating authority is under the principles of these rules Therefore, the demand is rightly made.